Simon Hendery: Unbundling at a snail's pace

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The march towards the level playing field utopia of local loop unbundling continues at an excruciatingly glacial pace.

Let's recap: for years the telecommunications industry pleaded for Government action to open up Telecom's monopoly copper line network to competitors, a concept embraced by the rest of the developed world with the exception of Mexico.

By last year the call for change had become too loud to ignore. On May 2 last year a parliamentary messenger did his bit to expedite the process by leaking Cabinet's decision to unbundle to a mate at Telecom.

It took until December 22, however, before an amendment to the Telecommunications Act was passed, setting the process in motion.

Since then the Commerce Commission, the Telecommunications Commissioner, Telecom and the wider industry have been locked in a titanic consultative and regulatory tag wrestling match.

For Telecom's competitors, the euphoria of May 2006 has morphed into teeth-gritting frustration as the process has dragged on.

Technology investment plans are on hold as the smaller telcos wait to find out when, and at what price, they will get access to Telecom's exchanges.

Telecom has not so much been dragging its feet as struggling to keep up. It has been making what appears to be a genuine effort to engage with the rest of the industry through a necessary, but agonisingly slow, consultation process.

Early this month Telecom wrote to the commissioner pleading for more time to deliver one of the key documents in the process, its "standard terms proposal" outlining how it suggests unbundling could be implemented.

Among its reasons for wanting an extension, Telecom said its staff were working under extreme pressure. It cited its responsibilities under the Health and Safety in Employment Act and said: "There is a real prospect that we will lose more staff as a result of these excessive workloads. ...

Outgoing commissioner Douglas Webb remained staunch, however, telling Telecom to stick to the June 12 deadline because he needed "to ensure the integrity of the process for all parties and prompt delivery to the market of these key services that will promote competition in telecommunication markets."

The standard terms proposal duly arrived as ordered last week, in the process shedding a little more light on how far away we remain from achieving the reality of unbundling.

The next step is that Telecom's proposal goes through a consultative process before the commission sets the rules, which it plans to do by November 9.

From then, under Telecom's proposal, it would begin a "soft launch" of local loop unbundling in five of its exchanges 40 working days later (by which time it will be January 2008). Apparently a further 80 working days will then pass before full local loop unbundling (LLU) can be implemented, taking us into the middle of next year.

From there the issue becomes actually installing the required competitor equipment in Telecom's exchanges. This could take a while because in some exchanges space simply doesn't exist at present.

Commentator Juha Saarinen predicts unbundling will actually drag out until at least 2010.

"This whole process should have been set in motion around the new millennium ... without all the ridiculous gabfests and pen pushing, as we would have had working LLU now with a large market that has investment incentives to build faster networks," he wrote last week.

Telecom and the industry say, however, that the present gabfesting is required to push the process along.

Malcolm Alexander, chairman of the Telecommunications Carriers' Forum, an industry body working through the plethora of LLU issues with Telecom, says the dialog is actually speeding up the process.

This is because the TCF has been working alongside Telecom as it has drafted its standard terms proposal (STP), Alexander wrote this month in a column for industry magazine Telecommunications Review.

"Industry members of the TCF will not have to spend time reviewing or changing any of the agreed-upon elements after the STP is sent to the Commerce Commission, making it a smoother and faster process towards the commission's final decision," he said.

"It also substantially narrows the number of issues the industry need focus on when it submits on the STP. For consumers the benefit will be less delay in getting to access services as there will be a common industry understanding on these matters, enabling faster implementation."

Let's hope that is the case because, as Saarinen points out, the DSL technology used to deliver broadband over Telecom's copper lines is looking increasingly old and tired.

* simon@businesswriter.co.nz

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